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4 Ways Good Credit is Your Safety Net

A healthy savings account is your best defense against life’s curveballs. But sometimes setting aside money every paycheck isn’t enough.

A good credit score can be an additional safety net, providing you access to low-interest credit options that can help cover expenses when your emergency savings fall short. Here are a few options:

1. Credit Cards can be useful for relatively small emergencies. Of course, this requires not maxing out your credit card on non-emergency items. Keeping a decent chunk of your spending limit available will not only offer you a good lifeline but can also boost your credit score. Plus, a good credit score can give you the opportunity for better rates.

2. Signature Loans, also called personal loans, can be used for making purchases like car repairs or for doing moderate-sized projects.

3. Home Equity Loans can be useful when you have available equity in your home (you owe less than your home is worth), and you can take out a home equity loan. It’s a one-time lump sum loan, usually of a sizeable amount. It can be good for big projects, like remodels, additions, building a shop, or paying off your other higher-rate debt.

4. Home Equity Line of Credit is much like a home equity loan, except instead of taking out one big lump sum, you can use the line of credit like a credit card. You can make purchases, pay the balance down, and make new purchases. It’s helpful for regular projects or sizeable emergencies.

Adequate savings is always best for emergencies, but you do have options for a safety net when the emergency is bigger than your savings. By using your available credit options, making payments on time, and paying things off, you will also continue to build your credit score. 
 
Source: Copyright Credit Union National Association Inc.